Studies & Reports

Economic gains attributable to defined benefit (DB) pensions in the U.S. are substantial. Retiree spending of pension benefits in 2016 generated $1.2 trillion in total economic output, supporting some 7.5 million jobs across the U.S. Pension spending also added a total of $202.6 billion to government coffers, as taxes were paid at federal, state and local levels on retirees’ pension benefits and their spending in 2016.

Pensionomics 2018: Measuring the Economic Impact of Defined Benefit Pension Expenditures reports the national economic impacts of public and private pension plans, as well as the impact of state and local plans on a state-by-state basis.

This study finds that in 2016:

$578.0 billion in pension benefits were paid to 26.9 million retired Americans, including:

$294.7 billion paid to some 10.7 million retired employees of state and local government and their beneficiaries (typically surviving spouses);

$83.0 billion paid to some 2.7 million federal government beneficiaries; and

$200.3 billion paid to some 13.5 million private sector beneficiaries.

Expenditures made out of those payments collectively supported:

7.5 million American jobs that paid nearly $386.7 billion in labor income;

$1.2 trillion in total economic output nationwide;

$685.0 billion in value added (GDP); and

$202.6 billion in federal, state, and local tax revenue.

DB pension expenditures have large multiplier effects:

Each dollar paid out in pension benefits supported $2.13 in total economic output nationally.

Each taxpayer dollar contributed to state and local pensions supported $8.48 in total output nationally. This represents the leverage afforded by robust long-term investment returns and shared funding responsibility by employers and employees.

The purpose of this study is to quantify the economic impact of pension payments in the U.S. and in each of the 50 states and the District of Columbia. Using the IMPLAN model, the analysis estimates the employment, output, value added, and tax impacts of pension benefit expenditures at the national and state levels. Because of methodological refinements explained in the Technical Appendix, , the state level results are not directly comparable to those in previous versions of this study.

A new report finds that teacher pension plans play a critical role in retaining educators while also providing greater retirement security than 401(k)-style retirement accounts. Eight out of ten educators serving in the six states studied can expect to collect pension benefits that are greater in value than what they could receive under an idealized 401(k)-type plan. The study also finds that the typical teacher in these states that offer pensions will serve 25 years in the same state, while two out of three educators will teach for at least 20 years.

These findings are featured in new research, Teacher Pensions vs. 401(k)s in Six States: Colorado, Connecticut, Georgia, Kentucky, Missouri and Texas, from the UC Berkeley Center for Labor Research and Education (Labor Center) and the National Institute on Retirement Security. The report is author by Dr. Nari Rhee, director of the Retirement Security Program at the UC Berkeley Labor Center, and Leon (Rocky) Joyner, vice president and actuary with Segal Consulting.

In twenty states, public charter schools are given the option to participate in a public pension plan or to enroll their teachers in an alternative retirement plan. This report aims to determine the impact of this choice on the retirement security of charter school teachers.

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